PayPal Acquires Startup to Make Products as Viral as Goodreads

April 12 (Bloomberg) -- EBay Inc.’s PayPal unit is buying
Iron Pearl, a startup that helps companies find ways to make
their products more attractive to customers on the Web.

Iron Pearl co-founder Stan Chudnovsky is assuming the role
of vice president of growth at PayPal, heading a new team tasked
with getting existing customers to boost their use of services,
PayPal President David Marcus said in a blog post yesterday. The
companies didn’t specify terms of the agreement.

EBay, based in San Jose, California, is expecting payment
volume at PayPal to double in the next three years as people
increasingly shop and pay for goods on mobile devices. PayPal
has introduced new tools and software in the past 18 months,
including a mobile credit-card reader for smartphones and
tablets, and a system that lets consumers use PayPal at
checkouts in physical stores such as Home Depot Inc.

“There are only a very few people who have actually
mastered the art of growth,” Marcus said in an interview,
referring to Chudnovsky’s background in helping companies
cultivate active users. “Stan is definitely one of those.”

Marcus said Chudnovsky’s experience at Goodreads Inc., the
reading social network that Amazon.com Inc. agreed to buy last
month, would be useful at PayPal. Chudnovsky was a board member
and investor in Goodreads for eight years, helping its viral-marketing efforts and encouraging readers to write reviews.
Goodreads has 16 million members and 23 million reviews.

Card Readers

PayPal has declined to say how many merchants are using its
mobile card reader in the U.S., which charges a flat rate of 2.7
percent for card swipes. Square Inc., started in 2009, has had 3
million merchants activate its stamp-sized swiper, with $12
billion in payment transactions on yearly basis, according to
Aaron Zamost, a spokesman for Square.

Chudnovsky and Iron Pearl co-founder James Currier have a
track record in online games and marketing before working on
Palo Alto, California-based startup. The two founded viral-marketing website Tickle Inc. and sold it to Monster Worldwide
Inc. in 2004 in a deal valued at around $100 million.

More than 5 million people joined PayPal in the last three
months of 2012, the biggest quarterly gain in more than eight
years, according to Marcus. Chudnovsky and Currier will lead the
effort to increase the pace of growth of PayPal’s 123 million
active customers, Marcus said in the post.

Chudnovsky “managed to create genuine and sustained viral
growth and retention for his own startups, and has advised
others to grow at a tremendous pace,” Marcus said. “We’re
confident that applying this unique, and highly effective skill
set to PayPal will lead to making our groundbreaking payments
experiences even more ubiquitous.”